The law requires individuals who manage and govern charities to exercise due care in administering the charity's affairs and prohibits them from using their position to obtain personal gain for themselves or others at the charity's expense. A written conflict of interest policy is a practical way to provide safeguards to prevent transactions that result in private benefit at the charity's expense. Whilst The PEACE Fund does not remunerate its officials and all labor is voluntary labor, for the purpose of completeness and context this policy will make reference to those potential situations.
Grant making foundations in the U.S. have a strong history of being created with honorable motives and operated with unquestionably high standards—standards that reflect the honor, respect for society and philanthropic impulse of their founders. The PEACE Fund seeks at all times to ensure that it continues to uphold and maintain these high standards.
The law requires individuals who manage and govern foundations ("fiduciaries") to exercise due care in administering the charity's affairs. This requirement is known as the duty of care. The law also prohibits fiduciaries from using their position to obtain personal gain for themselves or others at the charity's expense. This requirement is known as the duty of loyalty. Paying careful attention to transactions where there may be conflict of interest ensures that a fiduciary does not breach his or her duties of care and loyalty to the organization. It can also help instill public trust by demonstrating hat fiduciaries are committed to managing an organization with the utmost integrity and good faith and n the best interest of the organization and its charitable mission.
In the context of charities, a conflict of interest may occur when personal interests prevent an individual from making an impartial decision that is in the best interest of the charity. Applicable legal standards and prohibitions differ depending on whether the charity involved is a public charity or a private foundation, whether the transaction is financial or nonfinancial in nature, whether state or federal law is most pertinent and whether the charity is organized as a trust or a corporation.
The purpose of a conflict of interest policy is to protect The PEACE Fund's (a taxexempt 501(c )(3) interest when it is contemplating entering into a transaction or arrangement that might benefit the private interest of an officer or director of the Organization or might result in a possible excess benefit transaction. This policy is intended to supplement but not replace any applicable state and federal laws governing conflict of interest applicable to Nonprofit and charitable organizations. This policy serves as a guideline for addressing conflicts of interest and cannot cover every possible situation that may arise.
This policy is not intended to be a substitute for complying with legal requirements. The PEACE Fund is aware of federal and state laws that regulate conflict of interest transactions.
Any director, principal officer, or member of a committee with board delegated powers, who has a direct or indirect financial interest, is an interested person.
A person has a financial interest if the person has, directly or indirectly, through business, investment or family:
Compensation includes direct and indirect remuneration as well as gifts or favors that are not insubstantial. A financial interest is not necessarily a conflict of interest. A person who has a financial interest may have a conflict of interest only if the appropriate governing board or committee decides that a conflict of interest exists.
In connection with any actual or possible conflict of interest, an interested person must disclose the existence of the financial interest and be given the opportunity to disclose all material facts to the directors and members of committees with governing board delegated powers considering the proposed transaction or arrangement.
After disclosure of the financial interest and all material facts, and after any discussion with the interested person, he/she shall leave the governing board or committee meeting while the determination of a conflict of interest is discussed and voted upon. The remaining board or committee members shall decide if a conflict of interest exists.
Duty to disclose.
An interested person must disclose any actual or potential conflict of interest, and disinterested individuals (whenever possible) should decide if there is an actual or potential conflict of interest. The duty to disclose should be ongoing, in addition to filling out disclosure forms on a periodic basis.
Determining whether a conflict of interest exists.
The policy requires the conflicted person to leave the room while disinterested members discuss and decide if a conflict of interest exists. Interested persons should not be allowed to influence the decisionmaking process, whether inside or outside a meeting.
Procedures for addressing the conflict of interest.
If a conflict of interest exists, the policy requires the board or a committee to determine, if appropriate, whether the charity can obtain a more advantageous arrangement that would not pose a conflict of interest. Even if an alternative arrangement is not possible, the board or committee must conclude, by a majority vote of disinterested directors, that the transaction is in the charity’s best interest and it is fair and reasonable. In some cases, the governing board of a private foundation composed
The minutes of the governing board and all committees with board delegated powers shall contain:
Each Board member and/or official member of a committee with governing board delegated powers shall annually sign a statement which affirms such person:
To ensure that the PEACE Fund operates in a manner consistent with charitable purposes and does not engage in activities that could jeopardize its tax exempt status, periodic reviews shall be conducted if deemed appropriate by the Board. The periodic reviews shall, at a minimum, include the following subjects: